Can a general release inadvertently discharge a vicariously liable employer? Peterson v. Coca-Cola USA Explained

In Peterson v. Coca-Cola USA, the Utah Supreme Court addressed whether a general release agreement could discharge a vicariously liable employer that was unknown to the plaintiff at the time of settlement.

Background and Facts: Stephen Peterson was injured when Thomas Stengel, a Coca-Cola employee, fell asleep at the wheel and collided with Peterson’s vehicle. Peterson settled with Stengel for $50,000 without knowing of Stengel’s employment with Swire (doing business as Coca-Cola Bottling Company of Salt Lake). The release broadly discharged Stengel and “any and all other persons, firms and corporations,” with the only reservation being Peterson’s right to pursue underinsured motorist coverage. Peterson later discovered Stengel’s employment and sued Swire under respondeat superior.

Key Legal Issues: The central question was whether the broad release language effectively discharged Swire from vicarious liability under Utah’s Joint Obligations Act (JOA), which governs releases of vicariously liable parties. Peterson argued the release should be voided due to mutual mistake, his alleged incompetence, or because Swire was an undisclosed principal.

Court’s Analysis and Holding: The Utah Supreme Court affirmed summary judgment for Swire. The court distinguished between the Liability Reform Act (LRA), which applies to at-fault co-defendants, and the JOA, which applies to vicariously liable parties. Under the JOA, a release of one obligor discharges co-obligors unless there is an express written reservation of rights. Since Peterson’s release broadly included “any and all other persons, firms and corporations” without reserving rights against Swire, it effectively discharged the company. The court rejected Peterson’s arguments about mutual mistake, incompetence, and undisclosed principal status, finding insufficient evidence to support these claims.

Practice Implications: This decision underscores the critical importance of careful drafting in settlement releases. Practitioners must be aware that the JOA and LRA impose different requirements for releasing vicariously liable parties versus at-fault defendants. When representing injured parties, attorneys should thoroughly investigate potential employers or principals before finalizing any release and should always include express reservations of rights against unknown parties who might be vicariously liable.